DUBAI: The new tax to be introduced on corporations in the UAE is unlikely to affect the competitiveness of the country’s free zones, the head of the main commodity-trading center in Dubai has told Arab News.
Ahmed bin Sulayem, executive chairman of the Dubai Multi Commodities Centre, said: “The feedback I’ve had … (is that the tax) is not applicable to the free zones. Some businesses whose focus is domestic may, I think, see the value in sticking around if it makes business sense.”
He added that, even if the new corporate tax comes in next year at a rate of 9 percent of a company’s profits, the UAE will still compare favorably with other low-tax regimes and can continue to attract international businesses. “One thing I do know for sure is that the taxes in the UAE are less than Ireland, and Ireland’s been a nice place for Apple, from what I read,” Sulayem said.
The comments came as part of a wide-ranging interview in the Frankly Speaking video series, in which leading policymakers and businesspeople discuss the big issues of the day.
Sulayem, who is credited with making the DMCC one of the leading commodity hubs in the region, trading everything from coffee and gold right through to cryptocurrencies, also spoke about the prospect of greater competition with Riyadh, as the Saudi capital accelerates its push to be the dominant financial and commercial hub in the Gulf.
The planned new tax is part of the UAE’s long-term development strategy, he said. “It’s part of the UAE’s development, one of the infrastructure projects. You know, we’re the first Arab country to host the expo, [so] expect more initiatives.
“Not everything is announced but I do believe the UAE — Abu Dhabi, Dubai … — these cities are looking to provide a lot more than what we’ve seen today. Knowing our leaders, this is not even halfway; there’s a lot more they want to bring. They’re likely focused on the second, third and fourth generations to come.”
Sulayem said he welcomed the prospect of greater competition with Riyadh.
“When I look at Saudi Arabia, I also look at it as a coffee producer. They have farms bordering Yemen … I look at it from different levels. They’re big in jewelry as well,” he said.
“When Saudi Arabia also wants to promote itself, it’s not just Davos or New York; you could see NEOM billboards in Dubai. There’s a bit of complementing as well.”
He said he views the developments as an opportunity. “I personally love the fact that there are competing centers because it just breeds quality, and we’re up for the challenge. It’s a fun challenge for me,” he said, adding that he would be interested in processing and marketing Saudi coffee in Dubai.
Sulayem addressed head-on criticism of Dubai’s role as a leading gold trading center, in which it has been accused of complicity in gold smuggling from Africa, most recently in an article by Bloomberg.
“They quoted the minister of mines of Nigeria, and I believe … it’s taken out of context. I don’t think that’s the full conversation,” he said.
“The same minister is quoted [as saying] that they have weak data, they’re struggling. They have weak mining institutions. I mean, unless these are taken care of, I don’t think we can take these statements seriously.
“I have also sent an invitation to the minister of mines of Nigeria to come to the DMCC, to come and visit Dubai to see how we handle businesses and hopefully they pick up on what Dubai has been setting up.”
The DMCC currently has three operational gold refineries, with two more planned by the end of 2022. The UAE accounts for 25 percent of the global gold trade, Sulayem estimated.
He said that African governments and international travel organizations could also take more effective measures to counter gold smuggling, especially in the form of “hand carry” gold dore bars on board planes.
“Let’s go back to the concern here, as we’re talking about gold being smuggled out. Now, two countries in Africa have taken this challenge up, Ghana and Ethiopia, where they buy the gold from the artisanal miners. They are buying it. Ethiopia is providing fair prices — higher prices than the market — and shipping it straight to Switzerland to have it refined. That’s their solution.
“Ghana has a similar concept as well. As for the rest of the African countries, they can learn from (Ghana and Ethiopia). And if they can’t afford to do it, then join me at the webinar for banning ‘hand carry’ gold. This is the third or fourth one right now. IATA (International Air Transport Association) is attending it. I’m going to make sure the (World) Gold Council also attends it.”
Sulayem added: “I mean, if you can ban a bottle of water from entering a flight, you can also ban ‘hand carry’ gold. There’s no reason to encourage smuggling.”
Another big growth story for the DMCC has been the international diamond business, with Dubai challenging Antwerp for the title of the world’s biggest diamond trading center, having overcome controversy about the origins of some of the precious stones traded at the DMMC.
“Coming up in a few weeks, we’ll be hosting the World Diamond Council meeting. There’s the International Diamond Manufacturing Association also having their meetings here,” he said.
“We’re having possibly the most important jewelry show in the UAE’s history, in which Informa and Italian jewelry exhibitors are participating. Then we have our Dubai Diamond Conference, with all the sponsors and all the contributions and the involvement from others.”
Referring to the controversy, he said: “I think that it is more or less history. You will see here and there a comment, but there’s been nothing really attacking Dubai’s credibility. More of maybe capturing this market or that market, but we’re growing so fast.”
Sulayem has big plans to introduce other commodities to the DMCC’s successful ventures in coffee and tea trading, including saffron, honey and cooking oils, as well as new products.
“Other exciting commodities I know would be nuts — pistachio, cashew nuts, almond nuts.
“Chili, black pepper … I do not want to mention anything else except halal meat, kosher meat. This is likely going to happen soon, even if somebody else comes up with their own project in the UAE. Expect us to provide something at some point.”
As for cryptocurrencies, the DMCC recently launched its own digital currency center in partnership with Liechtenstein-based blockchain venture CV Labs.
Sulayem is enthusiastic about the prospects but within a controlled regulatory environment.
“For the crypto world and our partnership with CV Labs, it’s really adding another venue, another dimension for this industry. I know that before CV Labs, we opened the licensing for proprietary trading. We worry about any business handling other people’s money if the regulatory framework is not there,” he said.
“So, as and when the central bank is ready and the regulator is ready to allow, we expand. CV Labs and the DMCC Crypto Center prefer to be more regulated.”